Wolfspeed’s Revenue Forecast Misses Mark, But Shares Surge on Plant Progress
Wolfspeed’s stock surged 6% in extended trading despite the company forecasting lower first-quarter revenue, attributed to manufacturing challenges. The silicon carbide chip manufacturer expects first-quarter revenue between $185 million and $215 million, falling short of the $211.7 million analysts had anticipated. This forecast reflects anticipated production issues at its facilities amid a slowdown in electric vehicle (EV) sales.
The discrepancy between the forecast and stock performance can be attributed to positive developments at Wolfspeed’s Mohawk Valley plant in New York. The facility is operating ahead of schedule, with a 25% capacity utilization, compared to issues at the older Durham plant, which has faced equipment malfunctions. This positive news suggests long-term benefits from the new plant’s efficiencies, outweighing short-term revenue concerns.
Investors appear optimistic about future growth, betting on the efficiency and lower production costs promised by the new 200-mm chip fabrication plant. Wolfspeed’s key partnerships with major automakers like General Motors and Mercedes-Benz further bolster investor confidence.
For the broader market, this stock movement highlights a tendency to focus on long-term potential despite short-term revenue setbacks. Wolfspeed’s advances in silicon carbide technology, vital for the EV sector, position it favorably in the growing green tech market.
Despite the mixed forecast, Wolfspeed reported fourth-quarter revenue of $200.7 million, slightly below the consensus estimate of $201.31 million but reflecting a 100% year-over-year increase in EV revenue. The company’s adjusted earnings per share were -$0.89, missing estimates by $0.05. For fiscal year 2024, consolidated revenue rose to approximately $807 million, up from $759 million the previous year.
CEO Gregg Lowe noted progress at the Mohawk Valley plant, with utilization reaching 20% in June and a target of 25% for the first quarter of fiscal 2025, ahead of schedule. The company is shifting device fabrication to the new facility while planning to reduce capital expenditures by $200 million for fiscal 2025.